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Piracy and Movie Revenues: Evidence from Megaupload. A Tale of the Long Tail?

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  • Peukert, Christian
  • Claussen, Jörg
  • Kretschmer, Tobias

Abstract

In this paper we make use of a quasi-experiment in the market for illegal downloading to study movie box office revenues. Exogenous variation comes from the unexpected shutdown of the popular file hosting platform Megaupload.com on January 19, 2012. The estimation strategy is based on a quasi difference-in-differences approach. We compare box office revenues before and after the shutdown to a matched control group of movies unaffected by the shutdown. We find that the shutdown had a negative, yet insignificant effect on box office revenues.This counterintuitive result may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay.

Suggested Citation

  • Peukert, Christian & Claussen, Jörg & Kretschmer, Tobias, 2013. "Piracy and Movie Revenues: Evidence from Megaupload. A Tale of the Long Tail?," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79697, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc13:79697
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    References listed on IDEAS

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    1. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    2. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
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    Cited by:

    1. Wojciech Hardy & Michal Krawczyk & Joanna Tyrowicz, 2014. "Internet piracy and book sales: A field experiment," Artefactual Field Experiments 00696, The Field Experiments Website.
    2. Luis Aguiar & Jörg Claussen & Christian Peukert, 2018. "Catch Me If You Can: Effectiveness and Consequences of Online Copyright Enforcement," Information Systems Research, INFORMS, vol. 29(3), pages 656-678, September.
    3. Stefan Buehler & Daniel Halbheer & Michael Lechner, 2017. "Payment Evasion," Journal of Industrial Economics, Wiley Blackwell, vol. 65(4), pages 804-832, December.
    4. C. Bellégo & R. De Nijs, 2015. "The redistributive effect of online piracy on the box office performance of American movies in foreign markets," Documents de Travail de l'Insee - INSEE Working Papers g2015-17, Institut National de la Statistique et des Etudes Economiques.
    5. Wojciech Hardy & Michal Krawczyk & Joanna Tyrowicz, 2015. "Friends or foes? A meta-analysis of the link between "online piracy" and sales of cultural goods," Working Papers 2015-23, Faculty of Economic Sciences, University of Warsaw.
    6. Joost Poort & Jarst Weda, 2015. "Elvis Is Returning to the Building: Understanding a Decline in Unauthorized File Sharing," Journal of Media Economics, Taylor & Francis Journals, vol. 28(2), pages 63-83, June.
    7. Markus Pasche, 2014. "Welfare Effects of Endogenous Copyright Enforcement - the Case of Digital Goods," Jena Economic Research Papers 2014-008, Friedrich-Schiller-University Jena.
    8. Danaher, Brett & Smith, Michael D., 2014. "Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 1-8.
    9. Imke Reimers, 2016. "Can Private Copyright Protection Be Effective? Evidence from Book Publishing," Journal of Law and Economics, University of Chicago Press, vol. 59(2), pages 411-440.
    10. BELLEFLAMME, Paul & PEITZ, Martin, 2014. "Digital piracy: an update," LIDAM Discussion Papers CORE 2014019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    More about this item

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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